POCKETBOOK: Week ending July 28, 2017

Fewer choices

Equity prices and market indices continued their tear. One reason? Could be because there are fewer stocks to choose from.

According to data from the University of Chicago’s Center for Research in Security Prices (CRSP) the number of stocks is at its lowest level in decades. In November of 1997, for instance, there were 7,355 U.S. stocks and now there are fewer than 3,500.

That’s a huge drop. Huge.

Also on the slide are the number of initial public offerings, IPOs, while the appetite for investing in the private market is growing.

That aside, in today’s high-rising market environment, investors ought not forget to remember –re the higher prices— that what happens when a serious desire for equities mixes with a bounty of money and fewer publicly traded companies to choose from is prices go up.

And that’s how bid/ask auction marketplaces work.

Market Quick Glance

As equity prices continued to rise, they brought with them new index highs. The DJIA, for instance, reached a new high when the market closed on Friday, the S&P 500 and NASDAQ hit there’s on Thursday and the Russell 2000 on Monday.

So much for consistency.

Speaking of which, if there is one consistent thing this bull has shown investors is that this time it really is different. And quite likely, the sooner everyone decides to believe that, the sooner the bears will probably begin to roar.

Below are the weekly and 1-year index performance results— including the dates each reached new highs— according to data from CNBC.com. Data is based on prices at the close of business for the week ending on Friday, July 28, 2017.

-DJIA + 10.46% YTD up from last week’s +9.20%

1 yr Rtn +18.28% up from last week’s 16.54%

The DJIA reached a new all-time high of 21,841.18 on July 28, 2017.

(Previous highs include: July 14, 2017 of 21,681.53; July 3,2017 of 21,562.75; 21,535.03 on June 20, 2017; 21,391.97 reached on June 14, 2017; 21,305.35 on June 9, 2017; 21,225.04 on June 2, 2017; and 21,169.11 on March 1, 2017.)

-S&P 500 +10.42% YTD down a hair from last week’s 10.44%

1yr Rtn +13.92% down from last week’s +14.20%

The S&P 500 reached a new all-time high on July 27, 2017 of 2,484.04.

(Previous high of 2,477.62 was reached on July 20, 2017. Prior to that date new highs and dates include: 2,463.54 on July 14, 2017; 2453.82 on June 19,2017; 2,446.2 reached on June 9, 2017; 2,440.23 reached on June 2, 2017; 2,418.71 reached on May 25, 2017; 2,405.77 reached on May 16, 2017; 2403.87 on May 9, 2017; 2,400.98 reached on March 1, 2017.)

-NASDAQ +18.42% YTD down from last week’s +18.66%

1yr Rtn +23.66% down from last week’s 25.89%

The Nasdaq reached a new all-time high of 6,460.84 on July 27, 2017.

(Previous highss include: July 20, 2017 of 6,398.26; 6,341.7 on June 9, 2017; 6,308.76 on June 2; 6,217.34 reached on May 25; 6,170,16 on May 16; 6,133 on May 9, 2017; 6102.72 on May 2, 2017; 6074.04 on April 28, 2017; and 5,936.39 on April 5, 2017.)

-Russell 2000 +5.31% YTD down from last week’s +5.80%

1yr Rtn +17.41% down from last week’s +19.27%

The Russell 2000 reached its latest all-time high on July 25, 2017 of 1,452.09.

(Previous highs include: 1,452.05 on July 21, 2017; 1,433.789 on June 9, 2017; 1,425.7 reached on April 26, 2017 and of 1,414,82 reached on March 1, 2017.)

-Mutual funds

Average returns? Less than the week before.

The average U.S. Diversified Equity Fund lost a little ground last week closing at 9.59% at the close of business on Thursday, July 27, 2017, according to Lipper. That’s down from the previous week’s close of 9.84%.

If you’ve still only been thinking U.S. equities, one thing this year has shown investors is that better investment returns can be found in other places around the globe.

For instance, the average y-t-d return of the 4,516 funds that fall under the World Equity Funds heading,is 19.35%. That about 10% higher than what the average diversified equity fund has returned.

Yes, India Region Funds still rule—up on average 32.03%.

Of course the big question is how long will world funds continue to outperform U.S. ones. And the answer is: as long as other countries’ econonmies grow faster than ours.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Happy Birthday Medicare & Medicaid

In case you missed it, it was on July 30, 1965 that President Lyndon B. Johnson signed Medicare into law. He also signed Medicaid into law that same day. Both amendments to the Social Security Act.

Here’s more about that history from History.com: “At the bill-signing ceremony, which took place at the Truman Library in Independence, Missouri, former President Harry S. Truman was enrolled as Medicare’s first beneficiary and received the first Medicare card. Johnson wanted to recognize Truman, who, in 1945,had become the first president to propose national health insurance, an initiative that was opposed at the time by Congress.

“The Medicare program, providing hospital and medical insurance for Americans age 65 or older, was signed into law as an amendment to the Social Security Act of 1935. Some 19 million people enrolled in Medicare when it went into effect in 1966. In 1972, eligibility for the program was extended to Americans under 65 with certain disabilities and people of all ages with permanent kidney disease requiring dialysis or transplant. In December 2003, President George W. Bush signed into law the Medicare Modernization Act (MMA), which added outpatient prescription drug benefits to Medicare.

“Medicare is funded entirely by the federal government and paid for in part through payroll taxes. Medicare is currently a source of controversy due to the enormous strain it puts on the federal budget. Throughout its history, the program also has been plagued by fraud–committed by patients, doctors and hospitals–that has cost taxpayers billions of dollars.

“In 1977, the Health Care Financing Administration (HCFA) was created to administer Medicare and work with state governments to administer Medicaid. HCFA, which was later renamed the Centers for Medicare & Medicaid Services (CMS), is part of the Department of Health and Human Services and is headquartered in Baltimore…”